Chapter 8 The Dogwood Company has accounts receivable of $117,000 as of June 30.
ID: 2575163 • Letter: C
Question
Chapter 8 The Dogwood Company has accounts receivable of $117,000 as of June 30. The company's average selling price per unit is $15 and sales are collected 35% in the month of the sale and 65% in the month following the sale. Unit sales for June were 12,000 and the budgeted unit sales for July, August, September and October are 14,000, 20,000, 16,000 and 22,000, respectively They also have accounts payable of $95,000 as of June 30 and plan on paying $80,000 of that balance in July and the balance in August. Their beginning materials inventory is 4.200 units and they want ending inventory to equal 30% of the next month's purchase requirements. Material costs $7 per unit and their purchases are paid 40% in the month of purchase, 50% the following month and 10% two month's after purchase. Required: Construct the sales budget and schedule of expected cash collections for the quarter ended September 30. a) b) Calculate the accounts receivable balance as of September 30. c) Construct the materials purchase budget and the schedule of expected cash disbursements for material purchases for the quarter ending September 30. d) Calculate the accounts payable balance as of September 30.Explanation / Answer
a.
b.
c.
d.
Schedule of expected cash collections July August September Quarter Sale units 14000 20000 16000 Selling price 15 15 15 Sales 210000 300000 240000 750000 Collections: June 117000 117000 [12000*15*65%] July 73500 136500 210000 August 105000 195000 300000 September 84000 84000 Total cash collections 190500 241500 279000 711000